Why business law?
Starting a new business can be an exciting adventure! It creates great opportunities, both for you and possible future investors, employees, etc. But if formation does not occur properly, the business can fail just as quickly as it began. There are many rules, regulations, and practical issues involved in the process, so it is important to consult with a business law attorney about the steps and best practices.
Businesses in colorado
The process of forming a business begins with selecting the best entity type. Although variations exist, the entity choices are Sole Proprietorship, Limited Liability Company, Partnership, or Corporation. Depending on the type chosen, the owner(s) then register the company with the Secretary of State. Afterwards, they need to obtain a business tax identification number (“EIN”), establish internal operating documents, determine proper insurance and licensing, open bank accounts, begin the bookkeeping process, and then establish the company’s necessary operating contracts. All of this is a big endeavor, even for the experienced business professional.
If the owner fails to register the company correctly or misses any critical step, they might become personally liable for any debts of the business. Even worse, the IRS, State of Colorado, and/or any licensing agencies might initiate an audit. Fixing a problem caused by poor formation is expensive and time-consuming, and the business may never fully recover. In trying to navigate all these issues, a business law attorney can save you stress, money, and time.
For information about registering a company in Colorado, click here.
Partners, Investors, and Employees
Many people will run their business as a solo operation, but growth is a thrilling opportunity that sets up a business for long-term success. Growth can take many forms. For several businesses, merely adding employees is a big step. For others, expanding the business includes finding additional owners/partners, or even investors. In any case, there are many options to grow beyond a one-person enterprise.
Once a business has more than one owner, it is critical to outline and agree upon the operations of the business. These decisions include who manages day-to-day affairs, how to make and vote upon major decisions, and to distribute profits and losses, etc. Perhaps most importantly, the business agreement addresses transition issues like disability, death, and retirement. If an owner does not or cannot continue owning, the operational agreement creates a process to transfer or buy out those interests. But without a plan, the business can fall into time-consuming and expensive litigation.
Hiring employees is another great aspect of growth, but employees carry their own unique challenges. As a business, you must comply with all state and federal labor laws, as well as the IRS, Social Security, Medicare, etc. You must also put in place rules and procedures to protect yourself from claims by employees, such as for discrimination or harassment. Employers pay into Unemployment Insurance and must have Worker’s Compensation policies, plus manage a payroll process for wages. Compliance with every requirement is paramount but daunting. An attorney well-versed in business law can coach you in the best practices for hiring, maintaining, and even terminating employees.
Businesses of all kinds deal with contracts, whether for vendors, service providers, contractors, customers, etc. A contract may be hundreds of pages of legalese, or it may be a verbal agreement between friends. Regardless of how the agreement came about, the contract needs to contain the necessary elements to make it enforceable. And in creating a formal agreement, the document should adequately protect all parties involved.
Contract disputes can languish for years in the court system, with several disputes costing much more than the initial agreement. Even worse, one party may find itself with no power because they did not fully understand what they signed. Contracts are instruments of negotiation, and in every transaction, you can bargain to protect yourself.
Whether you simply need to review a contract, or if you need an advocate to negotiate for you, or if you need a standard contract written for your business, it is invaluable to have an attorney on your side. Contract matters can be efficient and quick to handle. But most importantly, contract negotiations and drafting cost only a fraction of what you would incur in litigation.
Sales, Mergers, and Succession Planning
Eventually, all business owners will change. Perhaps you choose to retire and pass your legacy down to your children. Or possibly you decide to sell the business to a partner, employee, or even a competitor. Or maybe, in the worst-case scenario, you experience an accident or illness that permanently forces you out. In any event, there is a great deal involved in moving a business from one person to another. Ideally, an owner will plan for succession in advance. Planning ensures a fixed process for the valuation and transfer of ownership, to prevent any disputes between owners. Even without, though, you can still sell, merge, or pass your business down to your beneficiaries with ease.
Regardless of how your ownership comes to a close, it is important that the ownership interests are correctly valued, that the negotiations protect your interests, and that the transaction closes on time and without conflict. An effective business law attorney will compile a team of experienced professionals to assist in this process. And importantly, an attorney should ensure that you walk away from your business both fairly compensated and confident about the future.
How can a business law attorney help?
There are many issues and tasks involved with any business. But as the owner, you should be free to focus on the services or products you care about. An attorney will help you understand the best practices for your company, and ensure that you take the necessary steps to protect yourself. For more information about successfully starting or operating a business, call Opfer | Campbell | Beck P.C. today for a no-cost business consultation and audit. Feel free to follow our company page on Facebook for additional resources, and for our ongoing Business Protections Series, click here.